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Under the Rent Control Act, the security deposit should be kept in a bank under the lessor's account name during the duration of the lease and any and all interest earned by the security deposit shall be returned to the lessee at the end of the lease.

If the tenant intends to occupy the rental unit for more than one year, the security deposit should be reported as a long-term asset (or noncurrent asset) under the balance sheet classification "Other assets". The landlord that receives and holds the security deposit should report the amount as a liability.